Tokyo, October 1

Emerging market currencies strengthened against the dollar today, helped by an upbeat mood across Asian equity markets on speculation of increased monetary stimulus.

But the greenback’s losses were unlikely to hold as sentiment remained dented on worries over a slowdown in China’s economy and concerns over a Federal Reserve plan to hike near-zero interest rates in 2015, analysts said.

The Australian dollar climbed 0.64 per cent to 70.63 US cents.

“When risk sentiment improves, the euro falls and the Australian dollar rises — it’s a classic case of risk-based pattern,” Kengo Suzuki, chief currency strategist at Mizuho Securities, told Bloomberg News.

“Right now, it’s developed-nation currencies versus emerging and commodities-linked ones which take their cues from stocks that either fuel or ease risk aversion sentiment.”

The South Korean won gained 0.76 per cent against the dollar after also rising more than one per cent on Wednesday.

The currency of Asia’s fourth-largest economy has weakened about 10 per cent against the greenback from a yearly low in April.

South Korean central bank has stuck to keeping key interest rates at a record low of 1.5 per cent in recent months, following four reductions since August 2014.

Other Asia-Pacific currencies also rose against the US unit: the Taiwan dollar was up 0.67 per cent, and the Indian rupee rose 0.06 per cent.

Singapore dollar declined 0.29 per cent, Malaysia’s ringgit was down 0.16 per cent, Indonesian rupiah edged 0.15 per cent lower, and Thai baht lost 0.16 per cent.

With financial markets in China and Hong Kong closed today for a public holiday, traders will pay attention to US unemployment figures for September, which Washington will release on Friday.

A strong reading will likely add to calls on the Fed to raise interest rates, putting renewed pressure on emerging economies as investors withdraw their cash to seek better returns in the US.